To Rise or Not To Rise: Stock Allocation During Retirement
Both the February and March 2015 issues of the Journal of Financial Planning include articles which address and extend the work on rising equity glidepaths during retirement, which Michael Kitces and I published in the January 2014 issue. Admittedly, the March one…
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Should I Contribute to a Roth IRA or a Traditional IRA?
At a basic level, the answer to this question relates to whether one is taxed at a higher marginal tax rate now compared to when one will be withdrawing these dollars in retirement.
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Lifecycle Finance: An Alternative For A Lifetime Financial Plan
Some of the most common rules of thumb used to guide retirement planning include the following:
Retirees should be able to sustainably withdraw 4% of their retirement date assets over their retirement.
Read MoreHow Do I Build a TIPS Bond Ladder for Retirement Income?
Building bond ladders for retirement income is an important but understudied topic. Especially as we are at a point in time when many are worried about future interest rate increases, bond mutual funds will lose value as rates rise, while a bond…
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Why Retirees Should Choose DIAs over SPIAs
My new column at Advisor Perspectives is called, “Why Retirees Should Choose DIAs over SPIAs.” In the past, I’ve written about the efficient frontier of retirement income, finding that retirees can best satisfy twin goals of preserving their lifestyle spending needs in…
Read MoreClaiming Social Security at 62 or 70
A consensus in the financial planning profession is that while the Social Security claiming decision is quite difficult and there can be exceptions, it is often beneficial to delay the receipt of Social Security retirement benefits. I will provide an exploration of…
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Risk and Retirement Finances
In my last blog post, I described a recent article by Paula Hogan and Rick Miller about different approaches to financial planning. I’d to come back to an issue from that article related to risk management for retirement finances. They make a…
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Efficient Frontiers for Other Retirement Spending Goals
Efficient Frontiers for Other Retirement Spending Goals
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Deciphering the Annuity Puzzle
My Advisor Perspectives column for July is now available. It is, “Deciphering the Annuity Puzzle: Practical Guidance for Advisors.” In this column, I explain the economic theory behind the puzzle. The puzzling issue is why people do not annuitize more of their…
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Ten Reasons Why the 4% Rule is Too Simplistic for Retirement Planning
What is the highest withdrawal amount as a percentage of retirement date assets that with inflation adjustments will be sustainable for the full 30 years? Here are 10 reasons that 4% may not be the appropriate withdrawal rate for every new retiree.
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It is Optimal for Retirees to Plan for Reduced Spending with Age
A general assumption is that people plan to spend a constant inflation-adjusted amount for as long as they live. However, this spending plan is actually not optimal for any reasonable set of preferences about the tradeoff between spending now and later, even if we assume that future market returns are known in advance.
Read MoreWhy Do Economists Say There is an Annuity Puzzle?
Economists are known for describing the annuity puzzle. The puzzle is: why do people not purchase income annuities (exchange a lump sum payment for a guaranteed lifetime income stream) to the extent predicted by economic theory? A number of explanations have been…
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